News Release

Software designers strut their talent at cost of profit, says Management Insights study

Proving their worth leads to overly complex products

Peer-Reviewed Publication

Institute for Operations Research and the Management Sciences

Many software designers intentionally create unnecessarily complex products that do less to serve their companies and customers than to advance their careers, according to the Management Insights feature in the current issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).

Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.

“The Hidden Perils of Career Concerns in R&D Organizations” is by Enno Siemsen of the University of Illinois at Urbana Champaign.

Companies are struggling to cope with increasingly difficult and complex product design projects. The study argues that this struggle is not only a result of accelerated technological change – product designers have an incentive to choose more difficult design solutions instead of simple solutions to further their careers.

Highly capable designers have an incentive to choose somewhat more difficult designs to better prove their talent, while less-capable designers have an incentive to choose highly difficult designs to obfuscate their lack of talent, Prof. Siemsen concludes.

One way to reduce these dysfunctional incentives, the author argues, is to move compensation agreements away from a long-term, career-oriented focus toward a more short-term focus in which bonuses are directly linked to the success or failure of projects.

Alternative ways to reduce these incentives are to collect better data on design task outcomes or to have product designers receive evaluations from managers who have an interest in the design projects succeeding and an excellent understanding of the technology.

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The current issue of Management Insights is available at http://mansci.journal.informs.org/cgi/reprint/54/5/iv. The full papers associated with the Insights are available to Management Science subscribers. Individual papers can be purchased at http://institutions.informs.org. Additional issues of Management Insights can be accessed at http://mansci.pubs/informs/org/.

The Insights in the current issue are:

  • The Effect of Product Introduction Delays on Operating Performance by Kevin B. Hendricks, Vinod R. Singhal
  • Appropriability and Commercialization: Evidence from MIT Inventions by Emmanuel Dechenaux, Brent Goldfarb, Scott Shane, Marie Thursby
  • A Theoretical Framework for Managing the New Product Development Portfolio:When and How to Use Strategic Buckets by Raul O. Chao, Stylianos Kavadias
  • Does Component Sharing Help or Hurt Reliability? An Empirical Study in the Automotive Industry by Kamalini Ramdas, Taylor Randall
  • The Dual Role of Modularity:Innovation and Imitation by Sendil K. Ethiraj, Daniel Levinthal, Rishi R. Roy
  • Sequential Testing of Product Designs: Implications for Learning by Sanjiv Erat, Stylianos Kavadias
  • Fragmented Property Rights and Incentives for R&D by Derek J.Clark, Kai A. Konrad
  • The Impact of Uncertain Intellectual Property Rights on the Market for Ideas: Evidence from
  • Patent Grant Delays by Joshua S. Gans, David H. Hsu, Scott Stern
  • Heterogeneity and Network Structure in the Dynamics of Diffusion:Comparing Agent-Based and Differential Equation Models by Hazhir Rahmandad, John Sterman
  • Pricing an Option on Revenue from an Innovation: An Application to Movie Box Office Revenue by Don M. Chance, Eric Hillebrand, Jimmy E. Hilliard
  • Research Note: When Is Versioning Optimal for Information Goods? By Hemant K. Bhargava, Vidyanand Choudhary

INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category “operations research and management science,” Management Science ranked in the top 10 along with two other INFORMS journals.

The special MBA issue published by Business Week includes Management Science and two other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.

About INFORMS

The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.


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